In my original post I called for a new currency. Plus the copper would add value and cap inflation since it would be fixed to the price of copper.
The dollar did this with gold.
Plus, if it were not a new currency, the inflation is vs other currencies. If the inflation were capped fixed to the price of copper, more money in the system would not devalue the currency in relation to the dollar. It would cause more money in circulation. So the Iranians could buy more imports, though inflation in the general economy. As Iran would be the only national currency backed more than by the full faith a credit of the nation, Iran would have a commodity currency.
Though I am not trying to convince you of everything I said.
You make no sense because if Iran had 20.000 tonnes of gold and backed their currency with it, according to you, this is inflationary and would cause massive inflation and prices go up because now their currency is backed by gold. You are comparing a worthless fiat currency backed by the full faith and credit of the government vs a commodity money that has real value. Thank you for your attention in this matter.
"Based on Iran's situation 5 years ago (2020–2021), implementing copper backing would have failed catastrophically:
The Context:
In 2020–2021, Iran faced severe sanctions that slashed oil revenues (exports fell from 2.5 million barrels/day to ~200,000 bpd)�. The central bank responded by printing money to cover fiscal deficits—money supply surged while GDP contracted 10%�. The rial collapsed: from 42,000 per dollar in early 2020 to 278,800 by September 2021, and inflation hit 45.2% in August 2021—the highest in 26 years�.
Why Copper Backing Wouldn't Have Worked:
Insufficient Copper Reserves Relative to Money in Circulation: Iran had ~322,000 tons of copper production annually�, but money in circulation was $700 billion (at 2017 rates) by March 2020�. The math doesn't work—there simply isn't enough physical copper to back that currency value.
The Real Problem: Fiscal Deficits, Not Money Supply Alone: Iran printed money because the government needed to spend (military, subsidies, payroll) but had no oil revenue�. Copper backing wouldn't have stopped the government from spending—it would just have forced them to liquidate copper reserves rapidly, depleting them within months�
Bottom Line:
Copper backing in Iran's 2020 scenario would have collapsed immediately. The government would have either abandoned the peg (as Nixon did with gold in 1971), or rapidly depleted reserves trying to stabilize a currency while unable to earn foreign exchange. The underlying problem—fiscal deficits financed by money printing—would have remained unsolved."
In other words, yes it provides stability in terms of current supply and demand. But the currency would still devalue due to money printing.
If the money supply growth matched the GDP growth, then yes backing by copper would stabilise the exchange rate and not allow for as much volatility. It would also help to some degree now too but the currency would still devalue none the less on average 40% a year due an increase in money supply of roughly similar amount every year.
classic
